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Euro Area Economic Forecast

Euro Area Economic Outlook

The economy should expand at a paltry pace next year. Germany’s projected recovery and lower inflation will underpin growth. Slowdowns in the Mediterranean economies and the lagged effects of previous monetary policy tightening will restrain activity, however. Potential turbulence in the banking and financial sectors and large public debts are risks.

Euro Area Inflation

Harmonized inflation fell to 2.9% in October (September: 4.3%). Energy prices fell more sharply, while prices for services, non-energy industrial goods, and food, alcohol and tobacco rose more softly. Inflation should fall in 2024 versus 2023’s average on still-high interest rates and a higher base effect. A wage-price spiral and commodity price spikes are upside risks.

This chart displays Economic Growth (GDP, ann. var. %) for Euro Area from 2010 to 2022.

2018 2019 2020 2021 2022
GDP per capita (USD) 40,732 39,820 38,719 43,477 41,671
Economic Growth (GDP, ann. var. %) 1.8 1.6 -6.2 5.9 3.4
Private Consumption (ann. var. %) 1.5 1.4 -7.8 4.4 4.2
Fixed Investment (ann. var. %) 3.2 6.5 -6.2 3.7 2.8
Industrial Production (ann. var. %) 0.8 -0.7 -7.7 8.9 2.3
Unemployment (% of active population, aop) 8.2 7.6 8.0 7.7 6.7
Fiscal Balance (% of GDP) -0.4 -0.6 -7.1 -5.2 -3.6
Public Debt (% of GDP) 86.1 84.1 97.2 94.8 91.0
1-week Repo Rate (%, eop) 0.00 0.00 0.00 0.00 2.50
Exchange Rate (ALL per USD, eop) 1.14 1.12 1.22 1.14 1.07
Current Account Balance (% of GDP) 2.9 2.5 1.7 2.8 -0.7
Merchandise Trade Balance (USD bn) 320 334 379 328 -86
Merchandise Exports (USD bn) 2,738 2,667 2,481 2,958 3,099
Merchandise Imports (USD bn) 2,418 2,333 2,102 2,630 3,185
International Reserves (USD bn) 823 914 1,079 1,197 1,187
Money (ann. var. of M2 %) 4.5 5.7 11.0 7.1 3.6

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